Managing U.S. Sanctions, Export Controls, and Trade Compliance Risks In U.S.-Africa Energy Investments

By Ngosong Fonkem *

As Africa Energy Week (“AEW”) 2026 concluded in Cape Town, South Africa, the opportunities for strengthening U.S.–Africa energy partnerships were increasingly evident. From oil and gas exploration and liquefied natural gas (“LNG”) infrastructure to renewable energy, power generation, and advanced energy technologies, Africa presents significant opportunities for U.S. investors and African businesses seeking to develop the continent’s energy resources and infrastructure. Realizing these opportunities, however, requires more than capital, technology, and sound commercial partnerships. U.S. sanctions, export controls, and international trade compliance requirements can materially affect project development, financing, procurement, and the execution of cross-border transactions. For African energy companies seeking U.S. investment, access to U.S.-origin equipment and technology, or participation in global energy supply chains, identifying and managing these legal and regulatory risks should be an integral part of investment planning and project execution, not an afterthought.

1. Managing U.S. Sanctions Risks

An African company may have no direct U.S. operations yet encounter U.S. sanctions considerations because its transaction involves a U.S. investor, U.S.-origin goods or services, a U.S. financial institution, or another connection to U.S. jurisdiction. Whether a particular transaction is prohibited, restricted, or permissible requires a fact-specific legal assessment; though not every transaction involving a foreign company or U.S.-origin item is automatically subject to the same restrictions. A sanctions-related issue involving a major project participant may delay financing, disrupt procurement, or require the parties to reconsider the transaction structure.

For African energy companies, sanctions exposure may arise at multiple stages of a project, including the selection of joint venture partners, engagement of contractors and suppliers, acquisition of project financing, procurement of equipment, and processing of international payments. Risks may also arise through indirect ownership or control, intermediaries, or counterparties whose activities or affiliations raise sanctions concerns.

Importantly, an African company does not necessarily need to maintain direct U.S. operations to encounter U.S. sanctions-related restrictions. A transaction may implicate U.S. sanctions laws because it involves a U.S. investor, U.S. financial institution, U.S. person, or other relevant U.S. jurisdictional connection. Certain transactions involving non-U.S. persons may also create exposure under applicable sanctions provisions, including restrictions addressing particular dealings with sanctioned parties or activities.

From a legal risk management perspective, sanctions due diligence should begin before material commercial commitments are made. Project developers and investors should assess the ownership and control of prospective partners, screen relevant counterparties against applicable sanctions lists, evaluate the nature and destination of proposed transactions, and establish procedures for identifying changes in ownership, designation status, or transaction circumstances.

Failure to identify sanctions-related concerns at an early stage can result in delayed financing, interrupted payments, disrupted procurement, contractual disputes, and potential civil or criminal liability where applicable. Appropriate due diligence and transaction-specific legal review can help parties identify these risks, determine whether a transaction is permissible, and evaluate whether restructuring, additional safeguards, or regulatory authorization may be necessary.

2. Managing Export Controls Risks

U.S. export-control laws can affect the export, reexport, and, in certain circumstances, transfer of equipment, software, and technology used in African energy projects. The U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) administers the Export Administration Regulations (“EAR”), which govern many commercial and dual-use items. Certain defense-related articles, technical data, and services may instead be subject to the International Traffic in Arms Regulations (“ITAR”), depending on their classification and the applicable regulatory requirements.

These requirements may be particularly relevant to energy projects involving specialized industrial equipment, advanced electronic systems, sensors, control systems, software, technical documentation, and other potentially controlled items. Depending on the item’s classification, destination, end user, and intended end use, an export or transfer may require a license or other authorization, or may be prohibited altogether.

For African energy companies, export-control considerations can directly affect the ability to procure equipment, obtain technical assistance, receive software updates, access engineering documentation, or engage U.S. personnel in certain technology-related activities. These risks become more complex when projects rely on equipment sourced from multiple countries, involve multinational engineering, procurement, and construction (“EPC”) contractors, or require technology to be transferred across borders during installation, commissioning, and ongoing operations.

Effective export-control risk management requires more than confirming where equipment will be shipped. Project participants should identify the applicable export-control jurisdiction and classification, assess licensing requirements, evaluate end-user and end-use restrictions, and determine whether proposed transfers of technology or technical assistance are authorized. Contractual arrangements should also address responsibility for obtaining licenses, providing accurate end-user information, complying with applicable restrictions, and managing delays arising from regulatory requirements.

Conducting this review during project planning and procurement can help avoid commitments to equipment or technology that cannot lawfully be supplied or transferred as anticipated. It can also reduce the risk of project delays, unexpected compliance costs, and contractual disputes between investors, developers, suppliers, and contractors.

3. Building African Trade Compliance Capacity

For African energy companies seeking U.S. investment and greater participation in international energy supply chains, trade compliance should be treated as a commercial and operational capability rather than merely a legal expense. A proportionate compliance framework can strengthen investor confidence, improve transaction transparency, and help demonstrate that a company is prepared to operate within the regulatory expectations of international business partners.

Many African energy businesses operate through regional subsidiaries, joint ventures, independent distributors, local agents, subcontractors, and international suppliers. Although these arrangements can be commercially advantageous, they may complicate the identification of beneficial owners, verification of counterparties, monitoring of goods and technology, and assessment of ultimate end users and intended end uses.

Companies should therefore consider developing risk-based compliance procedures that reflect the nature, scale, geographic reach, and regulatory exposure of their operations. Depending on the business, these procedures may include:

• Counterparty and ownership due diligence: Establishing procedures to identify relevant counterparties, beneficial owners, and potential sanctions concerns before entering into material transactions.
• Transaction and end-use review: Assessing the destination, intended end use, and ultimate end user of equipment, software, and technology, particularly where export-control restrictions may apply.
• Contractual risk allocation: Including appropriate sanctions, export-control, representations and warranties, cooperation, audit, and termination provisions in investment agreements, supply contracts, EPC agreements, and other relevant commercial arrangements.
• Internal controls and accountability: Assigning responsibility for compliance reviews, maintaining appropriate transaction records, and establishing escalation procedures for potential violations or other regulatory concerns.
• Legal and regulatory oversight: Engaging qualified legal, customs, and trade compliance advisers when transactions present complex jurisdictional, licensing, classification, or sanctions issues.

Ultimately, effective compliance is not simply about avoiding penalties. It can also improve project bankability, support due diligence by prospective investors and lenders, strengthen relationships with international suppliers, and reduce uncertainty in cross-border transactions.

Conclusion:

Africa Energy Week 2026 underscored the significant opportunities available to U.S. and African businesses seeking to develop the continent’s energy resources. Translating these opportunities into sustainable commercial outcomes requires not only capital, technology, and strategic partnerships, but also a disciplined approach to managing the legal and regulatory risks inherent in cross-border energy investments. For African energy companies, a proactive understanding of U.S. sanctions, export controls, and international trade compliance can help preserve access to international markets, strengthen relationships with U.S. investors, and support participation in global energy supply chains.

**Culled from November Edition of PAV Magazine. Ngosong Fonkem is an International Trade and Sanctions lawyer at Amundsen Davis LLC. He advises companies, countries, and individuals on how to navigate U.S. domestic and foreign legal issues on aspects of international trade and global trade risks.  Most recently, he co-authored a book on international trade and geopolitics titled, “Trade Crash: A Primer on Surviving and Thriving in Pandemics & Global Trade Disruption.”